The 2021 Housing Market Will Experience Bidding Wars Owing to the Low Housing Supply
In 2021, you should expect home prices to rise rapidly in Canada as the low supply of property forces most buyers into fierce bidding wars. This is according to RBC Senior Economist Robert Hogue as he shares the recently published bank’s 2021 housing market outlook. The primary reason for the low housing supply is attributed to the pre-pandemic housing demand across major regional markets and most provinces.
It is no secret that real estate is an extreme seller’s market. The low housing supply is excellent news for sellers because they will be netting hefty profits when they sell their homes. However, this is extremely stressful for buyers because they will have to deal with the stress of multiple offers, extremely high prices, and fierce bidding wars that have become the new normal in the residential real estate market.
According to Hogue, active home listing at the end of 2020 was extremely low compared to the 10-year average in areas like Quebec, BC, Ontario, and most of Atlantic Canada. This occurred despite the surge in the listings of downtown condos from spring in the largest cities in Canada. Hogue argues that property buyers will still compete fiercely since there are very few property options to pick from. As a result of stiff buyer competition, property prices will continuously shift upwards in these provinces. Hogue predicts a 9.6% rise in Ontario is 2021. Quebec will record a 9% increase while BC will record an 8.6% increase in property prices.
The main reason why most home searchers have not bought a home yet is because they are continuously outbid by buyers with a better offer. In the past, people could not buy homes because of unaffordable prices, but with the current high demand for houses, the supply is low but the buyers are many, resulting in fierce bidding for the available houses.
With very few property listings hitting the real estate market, you should expect the bidding wars to be a common feature of the home buying process. In addition, buying a single property will involve more buyers because most people are looking to buy a residential property for their families due to the uncertainty caused by the pandemic. Homebuyers should know when they need to back away from a deal if the property prices escalate more than they can pay for.
The pandemic has not only affected the prices in the bigger markets, but also the smaller markets. Therefore, you should not just fixate on the big urban markets. According to Hogue, we may experience stronger gains in the smaller markets compared to major urban areas since the prices of downtown condos are likely to stay flat in most of the 2021 months.
If buying a home is part of your desires in 2021, you need to prepare for the current reality of the residential market. Even though you may have heard lots of horror stories about bidding wars, you should not worry. This is because it is possible for you to win in a multiple-offer situation and get the home of your dreams. With the market conditions and trends that can change anytime, property buyers need to stay informed with all the current information they need before buying a property.